General Motors on Tuesday announced a $6 billion share repurchase plan after outlining $10 billion in stock buybacks last November. GM stock rose in a buy zone, while Ford Motor and Stellantis lost ground on Tuesday. Tesla, the largest automaker, measured by market capitalization, slid below a key level.
GM tied the new share repurchase authorization to profitable sales of its combustion-engine vehicles. The company is also "growing and improving the profitability of our EV business," GM CFO Paul Jacobson said in a news release. "This allows us to continue returning cash to shareholders."
But GM gave a somewhat mixed update on its emerging EV business. While EV demand is growing, it's lower than expected, GM indicated. The company said it now expects to produce 200,000-250,000 electric vehicles in 2024, down 10% at the midpoint from a previous target of 200,000-300,000. It was once expecting to build 400,000 EVs by middle of 2024.
"So at the lower end of that … it reflects the momentum that we have in the business," Jacobson said Tuesday during a Deutsche Bank investor event, according to news reports. The company's profitable gas-vehicle business offset weakness in electric vehicles last year.
Investors tend to like buybacks because they reduce share count and can boost earnings per share. Some investors also may welcome the further scaling back of output goals for GM's EV business, which is expected to drive growth in coming years but is losing money for now.
GM Stock Extends Breakout
Shares of General Motors gained 1.4% to 48.21 on the stock market today, following the buyback news. GM stock jumped 4.1% on Monday, topping a 46.16 buy point from a six-week flat base. The 5% buy zone goes to around 48.47.
The relative strength line rose Tuesday to the highest level since the consolidation began, a bullish sign.
The flat base for GM stock shows three up days on volume spikes in recent sessions. It also formed mostly above the 50-day moving average and well above the 200-day line. Both are positive signs.
$6 Billion In Share Repurchases, EV Growth
The company said Tuesday that it "expects to exhaust the remaining $1.1 billion" of its prior share repurchase authorization by the end of June. GM will "opportunistically repurchase shares" under the new $6 billion authorization "after the completion of the existing reauthorization," the news release said.
On the EV front, GM CEO Mary Barra told a shareholder meeting on June 4 that her company remains committed to electric vehicles, despite an industrywide slowdown in demand. The auto giant said that May was its best month ever for EV sales in North America.
The Cadillac Lyriq, Chevrolet Blazer, GMC Hummer and Chevrolet Silverado are driving EV growth, the company says. The $35,000 Chevrolet Equinox EV aimed at the mass market joined GM's lineup at the end of May, as well. GM is set to release its U.S. sales report for the second quarter in early July.
GM stock investors remain concerned about the shift to money-losing electric vehicles by GM and its peers, and away from profitable combustion-engine cars. Questioned about the EV transition at the June 4 shareholder meeting, GM CEO Barra said that her company's vehicle lineup ultimately will be guided by customer demand.
Ford Stock
Shares of Ford Motor gave up 2.2% on Tuesday. The stock advanced 1.9% to 12.38 on Monday. Ford stock shows a 13.95 cup-with-handle buy point, still well below the entry.
Ford stock tested resistance at the 50-day line on Monday after regaining the 200-day line in recent sessions. A decisive move above the 50-day could offer an early entry. However, much of the base formed below the 200-day line, which is not a great sign. Moreover, the relative strength line is lagging, reflecting Ford stock's underperformance vs. the S&P 500 in recent weeks and since early 2022.
Last week, Ford Motor reported that 2024 U.S. new vehicle sales surged 88% during the first five months to May. Sales of electric vehicles and hybrid vehicles drove gains in May, both jumping roughly 65%.
Both GM and Ford's EV gains come while Tesla struggles with slow demand for an aging lineup. Tesla stock lost 2.1% on Monday and 1.8% on Tuesday, undercutting the 50-day line and far below the 200-day level.
Stellantis Stock
Shares of the Italian American automaker slipped 1.4% on Tuesday. Stellantis stock extended recent losses below a downward-sloping 50-day line as well as the 200-day line. The relative strength line for Stellantis stock has plunged since March after the company warned of a turbulent year ahead. Analysts forecast a 21% earnings per share plunge this year, with sales seen down nearly 2%.
The Chrysler, Fiat and Peugeot parent, among other brands, is holding an investor day in Michigan on Thursday. Analysts expect management to try to assuage investor worries about elevated dealer inventory levels, especially given a 10% drop in volumes in the first quarter.
The event is also likely to focus on new vehicle launches in the second half of 2024. Stellantis will likely tout its "flexible" architecture approach to powertrain technology amid an EV slowdown, and its strong capital return profile.
Like its Detroit rivals, Stellantis continues to press forward on electric vehicles in a challenging market and macroeconomy. In late May, Stellantis CEO Carlos Tavares said the company plans to offer a $25,000 all-electric Jeep EV in the U.S. "very soon" for the mainstream market.
